Ex Greek Representative: “IMF Knew Austerity Program was Impossible to Succeed”

 It looks as if the IMF knew from the beginning the Austerity Program for Greece was far away from a possible success. This revelation comes from Panagiotis Roumeliotis, a former representative of Greece to the International Monetary Fund. For one striking reason: Because as a member of the common currency area, the Euro Zone, Greece could not devalue its currency. And because the IMF underestimated the impact of the austerity to the real economy.

“We knew at the fund from the very beginning that this program was impossible to be implemented because we didn’t have any — any — successful example,” said Panagiotis Roumeliotis at New York Times, a vice chairman at Piraeus Bank and a former finance minister who until January was Greece’s representative to the International Monetary Fund. Because Greece is in the euro zone, he noted, the nation cannot devalue its currency to help improve its competitiveness as other countries subject to I.M.F. interventions almost always are encouraged to do.

At the same time, Mr. Roumeliotis and others note, the troika underestimated the negative effect its medicine would have on the Greek economy.

“The argument that is used usually by the troika in order to criticize Greece — and to ignore their mistakes — is that the deep recession is because of the nonimplementation of the structural reforms,” Mr. Roumeliotis said. While Athens has fallen woefully short on that front, he conceded, the bigger problem is that the severe cuts contributed to the downward spiral by decimating economic demand within Greece.

It remains to be seen whether the troika is prepared to force Greece to default. Much of the talk on both sides is aimed at extracting concessions in negotiations. But while Greece has been pushed to the edge before, it now appears to be running out of time because its European partners, however complicit in Greece’s current plight, appear to be running out of patience.

The original [IMF imposed] plan called for Greece to return to financing its debts on the open market in 2014, an idea that one European official, speaking on the condition of anonymity, now calls a “fiction.”

Complicating matters is the fact that the troika’s institutions have different mandates and constituencies. “The troika is not one homogeneous bloc,” said Guntram B. Wolff, the deputy director of Bruegel, a public policy research institute in Brussels. “They have different views.”

Some experts say that the I.M.F. has been quietly pushing to ease the austerity terms while European leaders have mostly been trying to satisfy Germany’s demands to keep Greece on a tight leash to persuade its own voters to support the bailouts. (Full story New York Times via Capital.gr)


4 Responses to “Ex Greek Representative: “IMF Knew Austerity Program was Impossible to Succeed””

  1. AntonisX Says:

    This fine specimen of the Greek nomenklatura is turning things on it’s head. Not surprising because he thinks it safes his butt to put it the wrong way around. The severe cuts were the only way left because the Greek political system refused to even consider cutting into their power-base, that is the State in all it’s monstrosity.

    Second: there was indeed a gross “underestimated [of] the negative effect its medicine would have on the Greek economy.” Reason being that it became shockingly clear in the first year that absolutely nothing in the Greek economy, it’s budget, it’s practices, and so on were remotely real. Budgets were fairy-tales. Controls were non-existent or fake. Every single shred of information on which the MoU was based proofed to be a forgery.

    Unexplainable naïve of the IMF or Troika? Sure! But I challenge everybody to come up with one example of deceit on this scale in the last 30 or 40 years.

    (BTW, wasn’t it Papandreou who went to the IMF at a time when the other Europeans didn’t want anything to do with that? Or is my memory failing me on that point?)

  2. AntonisX Says:

    Roumeliotis was the permanent representative.

    Yes. And like almost all permanent reps at the IMF he is a (former) politician. And as a vice chairman at Piraeus Bank and a former finance minister is he one of the ‘top dogs’ in the nomenklatura.
    And although it is nice of him to talk about “we at the IMF”. But there are no ‘we’ at his level. Just guardians for the countries who placed them there. The fact that he, with his unique knowledge of Greek affairs and ‘phenomena’ did not warn his colleagues about it when the MoU-I was created is ample proof of that.

    He is well in the know that his successors are not doing much more then constantly preparing ‘cheat-sheets’ to try to fool the Troika and pass the buck to their successors and the next generation.

    And those who pay for this dearly are the young, the old and the sick. Cancer patients are not able to get a full chemotherapy cycle, but KYSEA is discussing 700 armoured vehicles (was there any decision on that? Haven’t heard it.)

    At least the “Greek phenomena” are slowly being explained and uncovered…

  3. Willard Says:

    WOW just what I was looking for. Came here by searching for


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: